Taiwan Surpasses India to Become the World's Fifth-Largest Stock Market

Taiwan Overtakes India in Stock Market Value as Chipmaker Rally Boosts Island's Economy

Taiwan has surpassed India as the world's fifth-largest stock market, with a market capitalization of $4.95 trillion as of Monday, according to data compiled by Bloomberg. This achievement is largely attributed to the breakneck rally in Taiwan Semiconductor Manufacturing Co. (TSMC), the world's largest chipmaker.

TSMC's shares have surged 49% this year, driven by its dominant market position in the artificial intelligence (AI) trade. The company now accounts for approximately 42% of the benchmark index, highlighting intense market concentration. The surge in TSMC's shares has been accompanied by a global rally in tech shares, with manufacturing hubs such as Taiwan and South Korea benefiting disproportionately from the AI investment cycle.

Comparison of Market Capitalization

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In contrast, India's market capitalization has dropped to $4.92 trillion, largely due to surging energy costs, slowing corporate earnings growth, and the lack of companies directly linked to the AI buildout. New regulations, however, are favoring TSMC. Taiwan's financial regulator increased the limit that domestic funds can invest in a single stock, allowing funds to hold up to 25% of their net assets in any listed company whose weighting exceeds 10% in the Taiwan Stock Exchange. Currently, only TSMC meets this criterion.

According to JPMorgan Chase & Co., the change may attract more than $6 billion of inflows to Taiwan. While Taiwan has overtaken India in market value, India's $4.15 trillion-dollar economy still trumps the island's $977 billion gross domestic product, according to International Monetary Fund estimates.

Indian stocks have fallen this year amid record foreign outflows, driven by elevated valuations and a weakening rupee. Higher energy costs have also stoked inflation concerns and clouded growth prospects. Global funds have sold nearly $24 billion of local equities so far this year as they chased the AI boom in Taiwan and Korea. India's gauge is down 8%, heading for its first annual drop after a decade of gains. India's weight in the MSCI emerging markets index has also fallen to about 12% from 19% last year.

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